While some might argue that Berlin is experiencing a housing bubble that is going to break at some moment, there is no need to believe this because Germany’s capital city still has a huge investment potential: meager vacancy rates (close to 1%), a growing young population (+50000 people per year), a strong economic development (as Germany main Start-up Hub), and low interest rates that are still fueling the upward trend of the market. This potential appears clearly with the sharp price rising for buildings last year (+12,5% in 2018). Today, the average purchase price for an apartment building in Berlin is around 3700 Euros per square meter.
Overview of Berlin Apartment Housing Market
With an average of 4150€ per square meter, residential condominium property prices in Berlin remain significantly lower than home prices most of large cities in Germany and capitals in Europe like Paris. In addition to this, there are some lower-priced neighborhoods in Germany where one can still buy at quite low budget. Investors may find this a great moment to get into these markets. Other regions continue to see prices climb at astonishing rates, so you need to work with a real estate professional who understands how to buy or sell a flat in Berlin. You also may want to work out a building development project with the local city authorities who target up to 200,000 new apartments built within the next decade. The building market was very active in Berlin during 2018 with over 700 apartment buildings sold, of which a large number is concentrated in the following central city areas:
It is getting hard to remember when living in Charlottenburg was not desirable as more people move to Berlin. The region has taken on a unique international flair that is found nowhere else in the world. This neighborhood now demands some of the highest prices for rents in the city. The number of available units for sale peaked in 2016, and there have been fewer units available ever since. Therefore, prices for buildings are on the rise, and there is no end in sight. Milieu protection areas and Umwandlungsverordnung has led to many taking a second look at this neighborhood where there is an estimated shortage of about 18,000 apartments currently. The average price of an apartment building property in the area of Berlin Charlottenburg -Wilmersdorf is 4177 Euro per square meter. The district has registered the highest number of building property transcations in Berlin with 89 apartment building sold in 2018.
Bordering some of East Berlin’s most popular neighborhoods, like Pankow, Wedding, Mitte, Friedrichshain, Weissensee, and Hohenschönhausen, Prenzlauer Berg is one of the most sought-after areas in the city. In the last decade, prices have climbed by almost 146 %, but there is still some opportunities to buy the right property, especially around Kollwitzplatz, Arnimplatz, Helmoltzplatz and in pockets along Greifswalder Strasse. If you target less hot locations toward Bornholmer Strasse and Wisbyer Strasse, there you might have more chances to find apartment buildings available at lower prices.
Young people from all around the world choose to live in Berlin Kreuzberg area. You can find many examples of stylish housing complexes south of Gitschiner Straße and Skalitzer Straße along with those in Bergmann-Kiez and Graefe-Kiez. While usually more modest in price, investors can often find great deals on both sides of Prinzenstrasse when looking for a property to buy. New developments in this area are generally privately funded, and they often give investors a high return on their investment. About 53 % of apartments is located in “Milieushcutz” property protection areas.
Investors used to know this region as one of the last remaining areas where East and West Germany divided, but new property developments in this area have destroyed the stereotypes. This region is one of the fastest growing areas of Berlin with over 800 apartments built during 2018. The building boom along the Spree and on the Stralau Peninsula is using most pre-fabricated buildings, so rentals are reasonably priced. This can be great for modest investors looking for property for sale. As it has been for several years, many are choosing more period luxurious housing along Karl-Marx Allee and Frankfurter Allee. Investors looking to get started in investing in Germany may want to consider northern areas where apartments for sale are relatively less expensive.The average price of an apartment building property in the area of Berlin Friedrichshain – Kreuzberg is 3529 euro per square meter. The district has registered 51 apartment building sale transactions in 2018.
Located at the center of Berlin, Mitte offers the most luxurious housing in Berlin. In particular, the areas surrounding Hackescher Markt, Potsdamer Platz, Brandenburg gate and Oranienburger Straße are very much in demand by international private home buyers and professional investors as many international family-offices are investing in luxury real estate in Berlin. Investors can also find many historical buildings, especially around Leipziger Straße. If you are going to invest in this area, it is vital to learn the difference between the municipal housing market and the free-housing market as the two behave quite differently.
Apartment building types in Berlin
The city of Berlin suffered a major destruction during the second world war and the Berlin Wall requisitioned large portions of the city center called No mans’s land. This land is now being constructed by property developers with essentially luxury apartment building complexes and offices. The city of Berlin has 4 main types of apartment building properties:
- Period apartment buildings: dating back to 1900s there are reconigzable with large entrances, high-ceilings up to 4m, massive wooden-flooring, large rooms and stucco ornements.
- Thirtees apartment buildings: built in the early 30s with a space optimization logic, they are recognizable for highly optimized floorplans, small sizes, often no balconies or lifts, minimalistic facades and standard ceilings of ca. 2.70m.
- Sixties apartment buildings: due to housing needs, large apartment building complexes were built during this period. They are quite standard and similar to thirtees buildings, except the addition of balconies and lifts.
- Stalinian apartment buildings: built in East Berlin during the 50-60s, they are reputed to be very robust and offer a unique insight into the city history. They have imposing ceramic-coated fassades, large hall entrances, lifts, balconies and ceiling-heights of ca. 3m.
- New apartment buildings: built in the last years with the property market boom, they offer modern features with balconies, lifts, parking places and energy-efficient consumption. Most of those apartment building developments are sold to private buyers as individual condominiums but it’s possible to acquire a package of apartments or to buy the overall apartment building project before the private sales start.
Tips to Keep in Mind for an apartment building purchase in Berlin
While it is necessary to work with a real estate broker, it is often easier to buy an apartment building in Berlin where apartments are already tenanted and to develop it over time. It’s also important to have professional legal advisory to understand the specificity of the the local property market and rental regulation and to make the necessary documentation check. Side costs to consider could amount up to 14 % of the sale price to five different entities, including a notary, land registry office, property office, and your property broker. It is possible to finance up to 70 % of the property purchase price of a new-build property in Berlin with a mortgage from a bank in Germany.
It is possible to find an excellent real investment in the German capital, but you must be prepared to act quickly, as the market is highly competitive. Determine your ideal property in terms of building type, location, yield and price development potential. Then, start casting your net. It’s not the more properties that you visit, the more likely you are to find the right one. Instead, it’s better to plan visits for well-targeted properties that you can financially assess in advance. Work with most established Berlin real estate agents who can move swiftly and get as much of your finances arranged ahead of time as possible.
If you are looking to buy an apartment building property in one of Berlin city central districts, please, do not hesitate to share your search criteria with our real estate agents. We are at your disposal for any information about Berlin apartment buildings types, properties prices, areas to target and investment potential.